New England editorial roundup

Saturday

Sep 29, 2012 at 11:15 AM

New England editorial roundup

The Providence (R.I.) Journal, Sept. 28, 2012

The latest development in China-Taiwan relations is good for Taiwan. The Bank of China has designated Taiwan as a clearinghouse for renminbi-denominated accounts. That involves China's "people's currency," also called the yuan. The move is expected to earn Taiwan about $12 billion a year. It's more important to China, which wants a "global" currency to rival the dollar. But, given the acrimony that China has always directed at the "renegade province," the fact that any deal was made is remarkable.

This comes at a delicate moment. China's continued upward trajectory is in question. Some four decades after the "ping pong diplomacy" that opened China to the world, the years of near double-digit gross domestic product growth that have lifted hundreds of millions out of extreme poverty are over. In recent years, China has sometimes resorted to various macro-economic stratagems to try to cool the country's hothouse growth. Nonetheless, the disparities in wealth are among the world's widest, making the scandal-plagued regime's change next month to a younger Chinese Communist Party leadership team especially fraught.

Regime succession, resisting any nod to the widespread calls for democracy, has become regularized in once-a-decade handoffs between two intra-party factions. The new team represents the "princelings" — offspring of Mao Zedong's revolutionary comrades in arms, under current Vice President and apparently soon-to-be-President Xi Jinping. They will replace the Hu Jintao-Wen Jiabao team, made up largely of the graduates of China's technical schools.

Many observers have judged Messrs. Hu and Wen as having failed to bring the China of cheap labor closer to a consumer-based and consumer-driven economy, the nirvana sought since Deng Xiaoping jettisoned much of Mao's Marxist ideology for a market-based development under the memorable slogan, "To get rich is glorious."

China has continued to over-invest in roads and bridges to nowhere — even though some are engineering marvels. That is partly the result of the corrupt crony-capitalist culture that has firm hold on the Chinese economy. Huge projects offer insiders huge opportunities. (One of our favorites examples is a bridge 30 miles long in Qingdao.)

Whether Xi and his comrades can advance on these fronts is doubtful. Their faction has already been weakened by revelations from last spring's Bo Xilai corruption-and-murder scandal, and there are many entrenched interests whom they will be obliged to placate — such as the party apparat and the army — before they can start to restructure the economy to more fairly allocate its profits.

And Taiwan may come to regard the renminbi deal as the high-water mark of cross-strait amity for a while.

The Brattleboro (Vt.) Reformer, Sept. 26, 2012

Republicans are always carrying on about the need to cut federal spending to reduce the deficit. One of their favorite targets is government programs that help the poor, like food stamps and housing assistance.

However, when it comes to corporate welfare they remain silent, even though government spending on that end of the spectrum nearly doubles the amount that goes to America's neediest citizens. The government spent about $59 billion to pay for traditional social welfare programs in 2006, while at the same time doling out $92 billion in assistance to corporations, according to an analysis from Think By Numbers, a progressive blog.

While Mitt Romney criticizes President Barack Obama for fostering a "government-centered society," the fact is the nation's riches corporations are just as guilty of reaching into the government trough. Harold Hamm, Romney's top energy adviser, asked lawmakers to keep tax breaks for oil and gas companies in place during a hearing earlier this month, according to a report in the Huffington Post. And companies tied to Romney's image have also benefited from government help; Bain & Co. reportedly received a bailout in the early 1990s.

Obama has proposed lowering the top corporate tax rate to 28 percent in exchange for a reduction in potential loopholes, according to The New York Times. Many corporations already pay well below the current 35 percent rate by using a variety of loopholes.

Last week, just a few days after a video emerged of Romney discounting 47 percent of the American public because they don't pay income taxes, Senate investigators revealed that many multinational corporations have avoided billions in U.S. taxes by shifting profits offshore and taking advantage of weak, ambiguous sections of the tax code, The Associated Press reports. Overall, investigators said more than 1,000 companies reported having more than $1.5 trillion overseas.

For example, Microsoft used "aggressive" transactions to shift assets to subsidiaries in Puerto Rico, Ireland and Singapore, in part to avoid taxes, said the report by the Senate Permanent Subcommittee on Investigations. The report also said that since at least 2008, Hewlett-Packard Co. has used complex offshore loan transactions worth billions of dollars to avoid paying taxes while using the money to run its U.S. operations.

Executives of both companies said they have complied with American tax laws. But just because it's legal doesn't make it right. And if the law allows them to get away with such financial shenanigans, then the law should be changed. If we were able to tax that money it would put a significant dent in the deficit — and by a lot more than cutting programs designed to help the poor and elderly.